Losing marginal ground
Muscat Securities Market loses some ground as the financial year for most of the companies comes to an end

The markets made marginal losses during the month of March on the Muscat Securities Market (MSM). The benchmark MSM 30 index lost 3.09 per cent to close at 5179.68 on March 22. All sector indices lost during the month. The Banking and Investment Index lost 3.33 per cent, the Industry Index lost 6.65 per cent and the Services Index lost 1.29 per cent.

Gainers and Losers :
The top gainers during the period were Flexible Industries (90 per cent), Cement and Gypsum (51.90 per cent) and Oman Hol. International (23.81 per cent).

The top losers during the period were Al Ahlia Detergent (55.93 per cent), The First Mazoon Fund ( 36.81 per cent) and United Finance (18.70 per cent).

All GCC markets, barring Oman, made significant losses during 2006. The maximum loser was Dubai, which crashed by 36 per cent during the year. This was followed by Qatar (16 per cent), Abu Dhabi (15.6 per cent), Kuwait (9.9 per cent), Saudi Arabia (4.3 per cent) and Bahrain (4.1 per cent). Oman markets gained 6.2 per cent this year, up to 22 March 2006. It may be noted that due to the recovery in the last few days the extent of losses was somewhat reduced in these markets.

In Saudi Arabia, if we compare the peak value of 20634 reached by the Tadawul All Share Index on 25th Feb 2006, there was a substantial fall to 14177 on 15 March 2006, a fall of 31 per cent in a span of 20 days !

As we have been stressing time and again, MSM is a very attractive market compared to its counterparts in the GCC region. MSM is the only market that has weathered the storm sweeping across the entire spectrum of GCC stock markets. It is an attractive market by any parameter. It is well regulated and controlled compared to the other GCC markets. People across the GCC region have taken note of this and that’s why it is holding so strong. We strongly advise our readers to stay invested in the market in good companies.
Study Findings We have conducted a study on the financials of 125 companies listed on MSM and noticed the following interesting points:

• The aggregate sales of all these 125 companies have grown from RO 1.55 Billion in 2004 to RO 1.85 Billion in 2005, registering a growth of 20 per cent.

• The aggregate net profit has gone up from RO 281 million in 2004 to RO 347 million in 2005, showing a growth of 24 per cent.

• The Net Profit Ratio has gone up from 18.1 per cent in 2004 to 18.7 per cent in 2005.

• The profit growth is even steeper in the case of index companies. Out of the 30 index companies, the aggregate net profit has gone up from RO 171 million to RO 226 million, registering a growth of 32 per cent.

• The Market P/E for MSM as a whole comes to 13.44. The P/E for MSM 30 index comes to 12.18.

Telecom Sector
We have also conducted a study on the financials of the leading telecom companies in the GCC sector. Following are the findings:

• The average P/E for the entire telecom sector in GCC works out to 21.61, compared to the P/E of 15.6 for Omantel at the current prices.

• The P/E is highest for Saudi Telecom (23.91) and lowest for Bahrain Telecom (10.51).

• The Price to Book Value Ratio of Omantel is 4.2 compared to the GCC average of 7.11.

• The Return on Net worth of Omantel is 27 per cent, which is lagging behind the GCC average of 33 per cent. However, the GCC is distorted because of the very high RONW of 38 per cent for Saudi Telecom. If this extreme figure is removed, Omantel’s average is very much comparable with the GCC average.

• We find that Omantel is quoting at an attractive valuation compared to the GCC average. If the average P/E of 21.61 is applied, Omantel should quote at RO 1.96, which is an appreciation of 38 per cent from the current level.